Shares of Amazon.com Inc. fell nearly 1% in Thursday trading after Italian authorities conducted searches at the company's Milan offices and the residences of several managers as part of a fresh tax investigation. The probe, reported by Reuters, is examining whether Amazon maintained an undeclared permanent establishment in Italy from 2019 through 2024.
The stock has now declined for seven consecutive sessions in February, shedding approximately 16% of its value and erasing close to $400 billion in market capitalization. This latest development follows Amazon's agreement in December to pay €510 million to settle a separate Italian tax dispute.
Substantial AI Investment Plan Under Scrutiny
Beyond regulatory pressures, investors are grappling with the company's ambitious capital expenditure plans. Amazon is reportedly targeting around $200 billion in artificial intelligence-focused investments for 2026, earmarked for data centers, semiconductor purchases, and related infrastructure.
Some analysts express concern that this spending reflects a competitive catch-up effort. "Amazon is losing the lead in cloud computing and is now scrambling to catch up through escalating investment," said D.A. Davidson analyst Gil Luria, noting rivals Microsoft and Alphabet are advancing their own AI ambitions.
Broader Business Developments
Separately, Amazon continues to expand its healthcare footprint, announcing plans Wednesday to extend same-day prescription delivery to nearly 4,500 U.S. cities and towns by year-end. The company also disclosed a 5.3% stake in electric aircraft manufacturer BETA Technologies via a recent regulatory filing.
The immediate challenge for Amazon is demonstrating that its significant capital outlays will quickly translate into accelerated growth and cash flow from its AWS cloud division, thereby alleviating investor skepticism. Market attention now turns to Friday's U.S. consumer price index report and any further developments from the Italian investigation.
